Keynes thought that one macroeconomic problem is that an economy:
a. can tend toward an equilibrium level of output that is below the potential level
b. will move back to its potential after a business cycle on its own.
c. always operates at the potential and business cycles are created by government intervention.
d. can be pushed below the equilibrium level of output by fiscal policy.
e. can be pushed away from the potential if prices and wages are flexible.
b
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Financial markets pay close attention to changes in the federal funds rate because these changes ________.
A. directly affect the interest payments on the national debt B. affect other interest rates in the economy C. directly affect a large volume of loans D. indicate commercial bank lending policies
When private expenditures decrease as a result of increased government spending, this is known as
A) the multiplier effect. B) the stabilizer effect. C) government deficit spending. D) the crowding out effect.
Society faces a trade-off in all of the following situations except
A) when deciding who will receive the goods and services produced. B) when deciding how goods and services will be produced. C) when some previously unemployed workers find jobs. D) when deciding what goods and services will be produced.
Explain why, when all adjustment have taken place, the perfectly competitive firm will operate at the minimum of its short-run and long-run average total cost curves and earn zero economic profit
What will be an ideal response?